1. RyanAir by the smart bruins
Iris Yu Ting Hsueh
Wen Shan Li
Jong Wong Baek
Sung Pae

2. Launch Strategy Smaller aircraft to avoid empty seats
Fly 4 roundtrips a day  gives customers flexibility and choices
Provide the same meals and amenities as its competitors
Focus on delivering first-rate customer service
single fare ticket without restrictions at 98 Irish pound, which is twice as cheap as its competitors’ average price
Also provides flexibility because customers would not need to book the flight in advance to get the low price
This could possibly capture the business side of the market and convert ferries/rail travelers to fly instead (larger customer base)

3. Competitors’ Response
Improve customer service & quality  luxury flight (differentiate)
Not respond: Ryanair is such a small competitor that it would not be profitable for BA and Aer Lingus to compete with it
Cut prices and enter into a price war
Dublin-London route is one of the most lucrative so Aer Lingus and British Airway would respond to Ryanair’s entrance to this market

4. Cost to Retaliate
If the airlines enter into a price war, Aer Lingus and British Airway would have to lower their price by almost half in order to match Ryanair’s price assumption: lowest price capture 100% customers
Cost of price matching = I£4,850,000
500,000 (I£166.5) = I£83,250,000 rev before Ryanair (62.5% capacity)
800,000 (I£98) = I£78,400,000 rev if price match (jumps to 100% capactiy)
Cost of matching = I£83,250,000 - I£78,400, = I£4,850,000
Can maintain profit if undergo restructuring
Currently, the highest cost = staff and fuel & oil for Aer Lingus and British Airway (40.5% of revenue)

5. Cost not to Retaliate
If the airlines if airlines ignore Ryanair Cost of price matching = I£5,806,000
500,000 (I£166.5) = I£83,250,000 rev before Ryanair (62.5% capacity)
436,000 (I£166.5) = I£72,594,000 rev if price not match (lose customers to Ryanair)
Cost of matching = I£83,250,000 - I£72,594, = I£5,806,000
It’s better to retaliate

6. Potential errors in the model
Bigger airline have royal customer base
Ryanair getting all its customer from BA and IA
Matching the price does not guarantee100% capacity for BA and IA

7. Profitability Is the proposed Irish pound 98 fare profitable?
Ryanair would make profit with the proposed fare until its two competitors respond
It would be able to attain a large customer base with its low fares
If respond by price matching, Ryanair would have to find ways to cut cost and lower the price even more or differentiate from the two competitors to stay profitable